A fixed price contract locks your number before construction starts, and the builder carries the risk if his estimate was wrong. Cost plus means you pay actual costs plus a fee, with no final number until the job ends. Many lenders will not finance cost plus at all.
The short version
- Fixed price: the builder absorbs estimating mistakes. Cost plus: you do.
- Under cost plus, your final price is unknown until the last invoice clears.
- Anasazi Builders works fixed price turnkey, signed by you, by Anasazi, and by your bank.
- Under a fixed price contract, the only thing that moves your number is a change you request and sign.
- The most common complaint John Worlund hears about other builders is the absence of a firm turnkey price.
What is the difference between fixed price and cost plus?
Under fixed price, the builder commits to a number before work starts and delivers the home for that number. If a trade comes in over his estimate, that is his problem. Under cost plus, you reimburse every actual cost and add a builder’s fee on top, so the total stays open until the project finishes.
The distinction sounds procedural. It decides who absorbs surprises.
| Fixed price turnkey | Cost plus | |
|---|---|---|
| Final number known | Before construction | After completion |
| Who carries estimating risk | The builder | You |
| What moves the price | Changes you request and sign | Anything that costs more than expected |
| Lender acceptance | Widely financed | Many lenders decline |
| Incentive on materials | Build to the spec that was priced | Fee often rises with total spend |
Why do lenders resist cost plus contracts?
Because a bank cannot underwrite a loan against a number that does not exist yet. Construction lending is sized to a total project cost, and cost plus refuses to name one until the work is done. That leaves the lender exposed to an overrun it never approved, so many simply decline the structure.
This catches people who have already fallen for a builder and a plan. They get to the financing conversation and find out the contract they were offered cannot be funded.
Ask the question in the first meeting, not the fifth.
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How does a fixed price turnkey contract actually work?
The price gets signed three ways: by the homeowner, by the builder, and by the bank. Behind it sits an itemized specification listing every included and excluded item, initialed page by page. Anasazi’s runs ten pages. It exists so nothing ends up in dispute when the house is half built.
“We are a fixed price. We don’t do cost-plus,” John says. “The price that we give and that we sign a contract with the homeowner and ourselves and the bank is a fixed price.”
Getting to that number takes work, which is why no honest builder can produce one on a first phone call. Your specific plan and selections go out to every trade, and close to thirty separate contacts across subcontractors, cities and counties happen before a real total exists. The full process is here.
Can the price still change after you sign?
Only if you change it. If you decide mid build that you want something different, that becomes a separate contract with its own fixed price, quoted to you before you agree to it. The original number is not adjusted quietly. You see the cost of the change and you say yes or no.
“The homeowner wants something, wants a change,” John says. “At that time we figure out what they want and then we give them a price. At that point they say yes or no.”
Some changes cost no time at all. On one project a set of long retaining walls with staircases between them got added mid build, and because the work was outside, the house never slowed down. Other changes do move the schedule. John tells you which one you are looking at before you commit.
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What goes wrong when there is no firm turnkey price?
The same pattern every time: the builder bids low to win the job, then discovers things he did not include, and charges them back as extras. Without a fixed total and a written specification, there is nothing to argue against. The job stretches and the cost climbs.
This is the complaint John hears most from people who arrive after a bad experience.
“The main thing is overcharging, underbidding and then charging extras, and not being clear, and not having a set turnkey price,” he says. “Instead the job just goes on and on and they get charged more and more.”
He is fair about why it happens. A less experienced builder’s bid is not always dishonest. It is often just incomplete, because he has not built enough houses to know what he is missing. That distinction does not help your budget, which is why experience is worth paying for.
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Common questions about home building contracts
Is cost plus ever the better choice?
It can suit projects where the scope genuinely cannot be defined up front. For a custom home where plans and selections are settled before construction, there is little reason to leave the number open.
Does fixed price mean the builder pads the number?
It means the builder has to be accurate. Anasazi assembles the total from actual trade quotes on your actual plan rather than a margin applied to a guess.
What is a turnkey price?
A single contracted price covering the completed home as specified. Anything outside that specification, such as landscaping or fencing, is stated as excluded so nothing is assumed.
What happens if a material price rises during my build?
Under fixed price that risk sits with the builder. Under cost plus it passes to you.
Has Anasazi ever needed a timeline penalty clause?
No. John’s answer is that it has never been necessary because the company has always finished ahead of the quoted date.
If a builder will not put a firm turnkey number in front of you, that answer is worth more than the estimate. Talk to John about what a fixed price contract on your project would look like, or read more about how a fully custom home comes together.
Related: How much does it cost to build a custom home in the Tri-Cities? · What is included in a custom home builder’s quote?
